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More than two dozen properties with Dallas-Fort Worth area addresses are connected to a mortgage fraud scheme that cost lending institutions millions of dollars between 2004 and 2007.

According to federal court documents from the Eastern District of Texas, David Diggles and Kris Gardner pleaded guilty this summer to defrauding lending institutions by submitting loan applications for Texas properties with inflated values and then reaping the profits.

Diggles, 40, of Desoto, conspired with Gardner, 47, who was employed by Capital Title of Texas in the Dallas area and served as an intermediary between brokers and lenders and buyers and sellers of real estate.

The two conspired with mortgage brokers, property appraisers and straw buyers to carry out the fraudulent practices, according to court documents.

The brokers submitted fraudulent mortgage applications for Diggles and the appraisers, licensed by the state, appraised the value of properties “so that the lending institutions could rely on the appraisals in order to determine whether to fund mortgage loans,” court documents say. Many of them were appraised hundreds of thousands of dollars more than what they were worth. The straw buyers used their credit to submit loan applications to qualify and receive mortgages in exchange for payment.

Eight lending institutions accepted the applications and funded the mortgages including Chase Home Finance and Countrywide Home Loans. Court documents say the brokers, straw buyers and appraisers conspired to profit off of the institutions.

“Diggles’ scheme was designed to defraud lending institutions by convincing them to approve mortgage loans for residential properties for which the property values had been fraudulently inflated for Straw Buyers who had been fraudulently qualified for loans,” court documents say.

The properties involved in the scheme were located in Heath, Irving, McKinney, Plano, Houston, Dallas and other surrounding cities.

Court documents say the criminal activity began in January 2004 and ended in July 2007.

Both Diggles and Gardner must now each pay close to $2 million and will report to a federal prison to start their sentences next month. Gardner was sentenced to two years. It’s not clear how long Diggles’ sentence is.